HP/Compaq deal approved by European Commission

1 February 2002 Hewlett-Packard’s proposed acquisition of rival systems vendor Compaq has been approved without conditions by the European Commission after a month-long investigation.

“A careful analysis of the merger … and of the competitive forces in the markets concerned has shown that HP would not be in a position to increase prices and that consumers would continue to benefit from sufficient choice and innovation,” said the European Commission in a statement.

However, the deal remains under the scrutiny of US competition authorities.

The European investigation had been sparked by fears that the merged company would enjoy an overwhelming influence in the European computer market. Post-merger, HP would control a 23% share of the European PC market and a 47% share of the European market for servers and disk storage, according to figures from analysts at the Gartner Group.

The decision has been welcomed by both Carly Fiorina, CEO of HP, and Mike Capellas, CEO of Compaq. “This is an important milestone, particularly given the significance of Europe to us,” said Capellas.

The influence of the European competition authorities over the course of major global mergers cannot be overstated. In July 2001, the European Commission quashed a $45 billion (€52.29bn) deal between the US industrial conglomerates General Electric and Honeywell over competition fears. That decision prompted an angry response from the US.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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